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Q » Explain derivative-based hedging.
06 Dec, 2025
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A » Derivative-based hedging involves using financial instruments like options, futures, or swaps to mitigate potential losses in an investment portfolio. By taking positions in derivatives that counterbalance the risk of the underlying assets, investors can protect against adverse price movements. This strategy is particularly useful in managing exposure to market volatility, interest rates, or currency fluctuations, thereby stabilizing financial outcomes and enhancing risk management.
06 Dec, 2025
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